Thousands of farmers in drought-stricken California are rallying this week in opposition to regulations that have frozen water supplies across the state.

"It's devastating, it's like I'll have to sell something. I'll have to sell half to maintain the other half," Alfalfa farmer Michael Erskine said.

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Erskine said the drought, combined with cuts to water deliveries, have slashed his bottom line by more than 50 percent.

At issue is a Ninth U.S. Circuit Court of Appeals ruling last week that upheld federal guidelines limiting water deliveries from the northern part of the state to the southern part of the state -- to protect an endangered fish called the Delta smelt. The ruling went against a lower-court ruling that overturned the 2008 guidelines from the U.S. Fish and Wildlife Service.

Environmentalists fought to preserve those guidelines, but farmers say they're preventing vital water supplies from reaching the areas that need it most.

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"I'm looking at tens of thousands of people being out of work," Rep. Devin Nunes, R-Calif., said. "We're probably going to have upwards of five, six, seven hundred thousand acres of farm ground that's going to be out of production."

As a result of the drought and water restrictions, experts believe retail food prices could jump as much as 3.5 percent this year.

In addition to a rally on Wednesday, farmers are also testifying at a congressional field hearing about the impact of the California water crisis.

Environmentalists hailed last week's appeals court decision.

Kate Poole, senior attorney with the Natural Resources Defense Council, said in a statement that the drought is the problem -- not the lack of water from the Sacramento-San Joaquin Delta.

"Taking more water out of the Delta is not going to solve our problems. The emergency drought is a state-wide problem that affects all of us -- from farmers to fisherman to the average citizen. And it's the drought, not the Delta, that's affecting the water supply this year. That's why Delta fisherman and farmers support these protections -- because their jobs and livelihoods depend on it," she said in a statement. "While we can't make it rain, we can take charge of our water use by investing in smart water practices that protect and preserve our water supply."

But others say that water is sorely needed right now.

"You're not going to grow anything with zero water, whether it's the lettuce that goes into your In-N-Out burger, whether it's the tomatoes that you use for your salsa, whether it's the nuts that you use for your health food -- all of that gets impacted here," Mario Santoyo, executive director of the California Latino Water Coalition, said.

That's why so many are rallying to bring attention to the problem as water deliveries dry up.

"It is true that we're in a drought condition, but it's also true there's a lot of regulations that are hampering water deliveries and really making it tough for the valley -- some of them don't make a whole lotta sense," Cannon Michael, with the Bowles Farming Company, said.

That makes it tough on farmers like Erskine and his son.

"I don't know what to tell him for a future," Erskine said. "Don't be a farmer. Government gets in the way."

Will Carr joined Fox News Channel (FNC) as a Los Angeles-based correspondent in June 2013.